Who can make an RRSP contribution?
As long as you have contribution room, you can make an RRSP contribution until the end of the year you turn age 71.
When can I make an RRSP contribution?
If you have contribution room, you can contribute at any time – either in a lump sum or by making periodic contributions throughout the year.
Contributions made in the first 60 days of the year can be used towards the previous year’s or current year’s contribution amount. The date usually falls around March 1 of the following year (subject to change because of leap years or if the 60th day falls on a Saturday, Sunday or public holiday). The government has also extended the deadline when natural disasters have occurred that could have interfered with people making their RRSP contributions (like the Quebec ice storm in 1997-1998).
The key to a healthy RRSP is to start early and establish a regular savings schedule. The longer your RRSP contributions are invested, the longer they will have to grow. Investing smaller amounts regularly reduces the stress of coming up with a lump sum, or worrying about what the markets are doing when you put a lump sum in your RRSP.
What if I can't contribute the full amount allowed?
You have a couple of options if you don’t have the cash on hand to contribute the full amount you’re allowed: You can carry your unused contribution room forward, or you can take out a loan.
You're allowed to carry forward any unused contribution room indefinitely. It simply gets added to your RRSP contribution limit, and you can use it at any time before the end of the year you turn age 71.
Depending on your personal financial circumstances and goals, you may want to look at the options for taking full advantage of your contribution room sooner rather than later.
What are some ways to increase my RRSP contributions?
There’s a few ways to do this:
1. You can borrow funds to contribute to your RRSP, and then use your income tax refund to pay the loan. Try the RRSP loan calculator to see if this might be the right option for you.
2. You can establish a PAC (pre-authorized chequing) where monthly contributions are made into the RRSP, as smaller amounts can be easier to manage than a lump sum contribution.
3. Increase the monthly contribution annually by the percentage of your annual salary increase. This way you’re always increasing the amount you save to achieve your retirement goals.
